India to operate two Venezuelan oil blocks, set to get access to world’s largest crude reserves

ONGC Videsh has secured a highly anticipated license from the US Office of Foreign Assets Control (OFAC) to operate oil and gas projects in Venezuela. ONGC Videsh, holds a 40% stake in the San Cristobal field and, along with other Indian companies, an 18% stake in the Carabobo-1 project.

Venezuela operatorship: From sanctions risk to full freedom

“Now we have full freedom to work on the Venezuela projects. Earlier, we were restricting our operations there because of the sanctions-related risk,” ONGC finance director Anupam Agarwal said on an August 5 analyst call after the company’s June-quarter earnings, according to the Reuters report.

He said Venezuela was offering additional incentives under its new petroleum law and that ONGC had expertise in operating fields with similar geology in India.

“We believe very soon we will see some positive developments, the new agreements signed, and we are taking over the operatorship for some of those projects from PDVSA,” he was quoted as saying in the Reuters report.

The move marks a significant shift for ONGC, which had previously held back from expanding operations in Venezuela due to US sanctions and related compliance risks. With Venezuela’s new petroleum law and evolving regulatory environment, the state-owned explorer now sees a clear path to assume operatorship roles, potentially boosting production and improving project economics.

PDVSA is the state-owned oil and gas company of Venezuela and conducts exploration, production, refining, marketing, transportation, and export of oil, along with natural gas activities.

Sakhalin-1 stake restored after 4 year gap

During the call, CFO Agarwal mentioned that ONGC regained its 20% stake in Russia’s Sakhalin-1 oil and gas project in December after a four-year gap. The restored stake increased the group’s quarterly revenue contribution from the project to about 10 billion Indian rupees ($105.13 million), compared with 5 billion-6 billion rupees earlier, Reuters reported.

Russia transferred Sakhalin-1 to a new domestic operator after Western countries imposed sweeping sanctions on Moscow following its invasion of Ukraine in February 2022.

ONGC agreed to make payments into the Sakhalin-1 abandonment fund in roubles using dividends frozen in Russia, allowing it to retain its 20% stake in the project, as Reuters reported last year. The arrangement enabled ONGC Videsh to preserve its equity interest while complying with Russian regulatory requirements and navigating international sanctions constraints.

Diversifying India’s overseas portfolio

The twin developments—Venezuela operatorship and Sakhalin-1 stake recovery—signal ONGC’s push to diversify and strengthen its overseas asset base amid volatile global energy markets. By assuming operatorship in Venezuela, ONGC can leverage its technical expertise in heavy oil and complex geology to enhance recovery rates and production efficiency. Meanwhile, the Sakhalin-1 stake restoration secures a steady revenue stream from a mature, high-output asset in Russia’s Far East.

For India, which imports nearly 90% of its crude oil needs, securing stable overseas supplies and maintaining equity stakes in strategic projects remain critical to energy security. ONGC’s renewed focus on Venezuela and Russia underscores the importance of balancing geopolitical risks with commercial opportunities to ensure long-term supply resilience, Reuters reported.

While ONGC executives expressed confidence about imminent agreements in Venezuela, the finalisation of operatorship terms will depend on regulatory approvals, compliance with US sanctions frameworks and coordination with Petróleos de Venezuela, S.A. (PDVSA) and other partners. In Russia, the Sakhalin-1 stake restoration is now complete, but future production levels will hinge on operational stability, evacuation logistics and adherence to local content requirements.